Country Assistance Program Evaluation for Indonesia (2005)

This country assistance program evaluation, the first prepared for Indonesia, focuses on the responsiveness of the Asian Development Bank country strategy and program to changes and challenges between 1990 and 2004.

This country assistance program evaluation, the first prepared for Indonesia, focuses on the responsiveness of the Asian Development Bank (ADB) country strategy and program (CSP) to changes and challenges between 1990 and 2004. On a cumulative basis, Indonesia is ADB's largest borrower and largest recipient of technical assistance. The evaluation assessed the overall performance of the ADB strategy and program in Indonesia as partly successful.

Lessons

ADB should continue to target support for sectors where it has a comparative advantage, subject to the Government indicating that they continue to be priorities for ADB assistance

Geographical coverage needs to be reduced to decrease transaction costs and complexity of implementation and management of operations. This would also improve the potential for sustainability of outcomes as the same local governments (LGs) will be provided with physical and social infrastructure support.

ADB has devoted substantial attention to governance issues in Indonesia, but results of governance reform are not immediate. Some of ADB's initiatives have established good governance practices at the village level, though these are not always sustainable unless LGs and communities are involved throughout the project cycle.

The policy agenda needed to attract private sector investments has potential elements in which ADB can engage, but this also needs strong government ownership.

Current PPTA grant resources are inadequate for detailed project preparation. Government borrowing should be in two stages: after the preliminary work on feasibility, and after safeguard issues have been finalized.

Given the lack of clear and cohesive administrative procedures, ADB could support the Government in strengthening administrative procedures in passing on loan and TA funds to LGs, if requested by the Government.

Provincial governments should be given the mandates to coordinate and prioritize projects between districts in their provinces and to monitor development effectiveness, governance, and the delivery of LG services.

Capacity development is needed to make local officials more responsible for environmental and natural resource management, and to identify and cultivate champions for sustainable development.

ADB should discuss with the Government an agenda for good governance and for addressing issues of corruption.

TAs need to be more strategically aligned, and have increased ownership by EAs, improved ADB supervision, and recruitment of better consultants.

Recommendations

The next CSP should identify niches where the Government wants ADB to play a major role in

building the necessary systems and capacity to improve efficiency in spite of decentralization

improving governance and anti-corruption initiatives

increasing public and private sector investment for the provision of public goods

building an enabling environment for the private sector

The next CSP should select key focus areas based on ADB's sectoral track record, mainstreaming governance in ADB operations, and geographic location. The areas of focus must reflect government priorities and the programs of other development partners.

The coverage of the CSP must be consistent with available ADB resources, both budgetary and staff, giving consideration on staff redeployment and strengthening the skill mix at IRM.

In order to cut costs of monitoring, ADB needs to use validated country information systems, coordinate with development partners, and limit the amount of data collected to what is useful for senior managers in the Government and in ADB.

The Government has identified ADB's policies, processes, and procedures that need improvement, and the latter should address these.

The next CSP should identify ways to catalyze private sector investment.

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